India needs to increase fiscal stimulus to revive economy: Pronab Sen

Former chief statistician Pronab Sen on Tuesday said the government should increase fiscal stimulus to revive the Covid-19 hit economy.

Sen said that as the lockdown has been lifted, the country should move into the revival phase.

"We need to increase fiscal stimulus ...  the monetary policy has done heavy lifting and now heavy lifting will be done by fiscal stimulus," he said while addressing a webinar organised by CII and Institute of Economic Growth (IEG).

The government in May announced a staggering Rs 20.97 trillion economic package, or about 10 per cent of GDP, which included Reserve Bank's Rs 8.01 trillion crore worth of liquidity measures.

Many of the measures unveiled by Finance Minister Nirmala Sitharaman had been in the form of loan guarantees which do not entail an immediate fiscal cost.

Several economists, brokerages and multilateral agencies have pointed to a deep contraction in the Indian economy mainly due to disruptions caused by strict lockdown announced to stem the spread of deadly coronavirus. Speaking at the event, professor of economics at IEG, Manoj Panda, said public expenditure on health must be increased.

Aditya Birla Group's chief economist  Ajit Ranade said public expenditure on health should be massively scaled up. Former CII president Naushad Forbes said the states are in dire need of funds so the government should think about giving them money in advance.